An offer in compromise is a potential option for taxpayers who are unable to pay their tax debt in full. The IRS evaluates various factors, such as the taxpayer’s income, expenses, assets, and overall financial situation, to determine whether accepting an offer in compromise is appropriate.
The IRS provides clear guidelines and forms for taxpayers to apply for an offer in compromise. If the IRS is unable to process the offer, they will return the application and fees and apply any payment included to the outstanding balance.
Different payment options are available, including lump sum cash payments or periodic payments, depending on the taxpayer’s circumstances. Low-income taxpayers who meet certain eligibility criteria may qualify for a waiver of the application fee, initial payment, and monthly installments while the IRS reviews the offer.
If an offer in compromise is rejected, the taxpayer has the right to appeal the decision within 30 days using the appropriate form, Request for Appeal of Offer in Compromise (Form 13711). The IRS Independent Office of Appeals can provide additional assistance during the appeals process.
It’s important to note that the process of submitting an offer in compromise can be complex, and it may be beneficial to consult with a qualified tax attorney or tax professional who can provide guidance and help navigate the process effectively.